Sub-letting: rising number of tenants becoming 'secret landlords'

Tenants taking on lodgers in bid to tackle rocketing rents, but risk serious consequences if they are found out.

A shocking number of tenants have admitted they they secretly sub-let their homes.

Research by Direct Line for Business has found that one in six tenants have rented out part or all of their property to someone who isn’t on the lease. Of those that have sub-let their home, 25% didn’t bother to check the terms of their lease to see if it was permitted, while more than a third didn’t tell their landlords.

Experts believe that an increasing number of tenants are sub-letting in an attempt to ease their own rent burden.

Nick Breton, head of Direct Line for Business, pointed out that with the average monthly rent in the UK now standing at £739, on average renters are handing over a third of their income each month to their landlord. “With the market having seen a 5% increase in average rents in the last year, it seems that a larger number of renters are tempted to offset this expense by sub-letting their properties,” he added

The costly consequences of sub-letting

Despite trying to keep their sub-letting secret, a fifth of those tenants who did not tell their landlord were found out. The consequences of sub-letting your home without permission can be devastating. Around 11% of tenants were evicted, with 6% of those losing their deposit as well. Based on a six-week deposit at average rent that is a loss of over £1,000.

Tenants who were caught sub-letting but weren’t evicted faced other repercussions. A fifth (20%) saw their rent increased, 14% were fined by their landlord and just 8% got away with a formal warning.

Paul Shamplina, founder of Landlord Action, said that that sub-letting is fast becoming one of the leading grounds for eviction, alongside rent arrears. 

Compare mortgages with loveMONEY

The AirBnB attraction

It isn’t just increasing rents that is making sub-letting more attractive. The rise of home holiday rental website AirBnB is giving tenants a simple and attractive way of making cash from their home.

When surveyed, one in six renters said they were considering sub-letting all or part of their home by advertising on a website like AirBnB.

“Organised sub-letting scams are becoming more prevalent, where tenants advertise properties and rooms on holiday or accommodation websites in order to cream a profit without the landlords’ consent,” says Shamplina.

Sub-letting around the country

Despite having the highest rents, London isn’t the where sub-letting is most prevalent. Tenants in the North West and the West Midlands are the most likely to secretly move in additional occupants.

Consequences for landlords

Tenants secretly sub-letting a property can have major consequences for landlords as it could invalidate their insurance. So landlords need to be on their guard to make sure they know exactly who is living in their rental properties.

“Sub-letting is not covered under most insurance policies,” said Breton. “It’s really important that landlords make their tenants fully aware of the restrictions on the lease and maintain that communication that can help prevent any future breaches.”

Compare mortgages with loveMONEY

Be better off with loveMONEY:

Make thousands TAX-FREE from your spare room

Why embarrassment is costing you hundreds

You vs your home: who earns more?